Exhibit 10.7
SUPPLY AGREEMENT
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This Agreement is entered as of March 20, 1998, by and between The
Michaels Concepts in Wood, Inc. ("Seller"), a California corporation,
Restoration Hardware, Inc. ("Buyer"), a California corporation and Xxxxxxx
Xxxxxxxxxx, an individual.
WHEREAS, Seller is engaged in the manufacture of certain furniture
products; and
WHEREAS, Buyer wishes to purchase a minimum volume of such products
from Seller and Seller is willing to supply Buyer with such minimum volume;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants set forth below, Seller and Buyer mutually agree as
follows:
ARTICLE I
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DEFINITIONS
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1.1 "Agreement" shall mean this Supply Agreement, as amended from
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time to time.
1.2 "Delivery Date" shall mean a date for which delivery of Product
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is properly requested in a purchase order.
1.3 "Product" shall mean each product supplied hereunder by Seller
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which is listed in and meets the specifications set forth in Exhibit I, attached
hereto and made a part hereof, as such Exhibit I is amended by the parties from
time to time.
1.4 "Term" shall have the meaning set forth in Section 5.1 hereof.
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ARTICLE II
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SALE AND PURCHASE OF PRODUCTS
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2.1 Sale and Purchase. Seller agrees to sell to Buyer and Buyer
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agrees to purchase from Seller a minimum volume ("Base Volume") of Product for
each of the fiscal years ending January 30, 1999 (fiscal 1998), January 29, 2000
(fiscal 1999) and January 27, 2001 (fiscal 2000) under the terms and conditions
of certain purchase orders to be delivered by Buyer to Seller from time to time
in substantially the form attached hereto as Exhibit II. The Base
Volume for fiscal years 1998, 1999 and 2000 will be thirteen million dollars
($13,000,000), fifteen million dollars ($15,000,000) and seventeen million
dollars ($17,000,000), respectively. It is understood that Seller may not in
connection with supply hereunder contract with respect to manufacture of Product
with any third parties.
ARTICLE III
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PRICE AND PAYMENTS
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3.1 Price. Buyer shall pay to Seller for Product purchased hereunder
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an amount equal to the lowest price, including all discounts, concessions and
allowances, paid by any other purchaser of Seller's Product during the fiscal
year in which Buyer's purchase occurs.
3.2 Method of Payment. All payments due hereunder to Seller shall be
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paid to Seller in United States dollars not later than thirty (30) days
following the date of the applicable invoice.
3.3 Examination of Books. Buyer shall have the right, at its own
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expense, for any period during which Product is purchased by Buyer hereunder and
for one (1) year thereafter, to have an independent public accountant,
reasonably acceptable to Seller, examine the relevant financial books and
records of account of Seller at normal business hours, upon reasonable demand,
to determine or verify the appropriate price of Product purchased hereunder. If
errors of five percent (5%) or more in Buyer's favor are discovered as a result
of such examination, Seller shall reimburse Buyer for the expense of such
examination and pay the deficiency with interest immediately. The opinion of
such independent public accountant shall be binding on the parties hereto with
respect to the cost of Product hereunder.
ARTICLE IV
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TERMINATION
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4.1 Term. This Agreement shall continue in effect until January 27,
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2001.
4.2 Termination by Mutual Agreement. This Agreement may be
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terminated upon mutual written agreement between the parties.
4.3 Termination for Default. If either party materially defaults in
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the performance of any material agreement, condition or covenant of this
Agreement and such default or noncompliance shall not have been remedied within
thirty (30) days after receipt by the defaulting party of a notice thereof from
the other party, the party not in default may terminate this Agreement.
ARTICLE V
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MISCELLANEOUS
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5.1 Entire Agreement. This Agreement contains the entire agreement
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of the parties regarding the subject matter hereof and supersedes all prior
agreements, understandings and negotiations regarding the same. This Agreement
may not be changed, modified, amended or supplemented except by a written
instrument signed by both parties. Furthermore, it is the intention of the
parties that this Agreement be controlling over additional or different terms of
any order, confirmation, invoice or similar document, even if accepted in
writing by both parties, and that waivers and amendments shall be effective only
if made by non-pre-printed agreements clearly understood by both parties to be
an amendment or waiver.
5.2 Assignability. This Agreement may not be assigned by either
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party without the prior consent of the other party; provided, however that Buyer
may assign this Agreement to any entity which acquires substantially all of its
assets or business.
5.3 Severability. If any provision of this Agreement shall be held
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illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
5.4 Further Assurances. Each party hereto agrees to execute,
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acknowledge and deliver such further instruments, and to do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.
5.5 Use of Party's Name. No right, express or implied, is granted by
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this Agreement to either party to use in any manner the name of the other or any
other trade name or trademark of the other in connection with the performance of
this Agreement.
5.6 Notice and Reports. All notices, consents or approvals required
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by this Agreement shall be in writing and shall be deemed to have been given or
made for all purposes (i) upon personal delivery, (ii) one (1) day after being
sent, when sent by professional overnight courier service, (iii) five (5) days
after posting when sent by registered or certified mail or (iv) on the date of
transmission when sent by telegraph, telegram, telex or other form of "hard
copy" transmission, to either party hereto at the address set forth below or at
such other address as either party may designate by notice pursuant to this
Section 6.6.
If to Seller
or Xxxxxxx Xxxxxxxxxx: Xxxxxxx Xxxxxxxxxx
The Michaels Concepts in Wood, Inc.
0000 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
If to Buyer: Xxxxxx X. Low
c/o Restoration Hardware, Inc.
00 Xxxx Xxxx, Xxxxx X
Xxxxx Xxxxxx, XX 00000
3.
And a copy to:
Xxxxxxx X. Xxxxxx
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
5.7 Relationships of the Parties. Both parties are independent
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contractors under this Agreement. Nothing contained in this Agreement is
intended nor is to be construed so as to constitute Seller and Buyer as
partners, agents or joint venturers with respect to this Agreement. Neither
party hereto shall have any express or implied right or authority to assume or
create any obligations on behalf of or in the name of the other party or to bind
the other party to any contract, agreement or undertaking with any third party.
5.8 Waiver. The waiver by either party of a breach of any provisions
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contained herein shall be in writing and shall in no way be construed as a
waiver of any succeeding breach of such provision or the waiver of the provision
itself.
5.9 Applicable Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of California without regard
to the conflicts of laws provisions thereof. BY EXECUTING THIS AGREEMENT, THE
PARTIES ARE AGREEING TO BE BOUND BY SECTION 9.15 (THE ARBITRATION PROVISION) OF
THAT CERTAIN STOCK PURCHASE AGREEMENT OF EVEN DATE HEREWITH BETWEEN BUYER AND
XXXXXXX XXXXXXXXXX. THEREFORE, THE PARTIES ARE AGREEING TO HAVE ANY MATTER THAT
IS THE SUBJECT OF ARBITRATION PURSUANT TO THIS SECTION 5.9 DECIDED BY NEUTRAL
ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND ARE GIVING UP ANY RIGHTS THEY
MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
EXECUTING THIS AGREEMENT, THE PARTIES ARE GIVING UP JUDICIAL RIGHTS TO DISCOVERY
AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE ARBITRATION
PROVISION OR ARE OTHERWISE PROVIDED BY CODE OF CIVIL PROCEDURE SECTION 1280 ET
SEQ.; IF ANY OF THE PARTIES REFUSES TO SUBMIT TO ARBITRATION IT MAY BE COMPELLED
TO ARBITRATE UNDER THE CALIFORNIA CODE OF CIVIL PROCEDURE. A PARTY'S AGREEMENT
TO THIS ARBITRATION IS VOLUNTARY. BY EXECUTING THIS AGREEMENT, EACH OF THE
PARTIES ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD THE FOREGOING AND HAS
AGREED TO SUBMIT DISPUTES ARISING OUT OF MATTERS INCLUDED IN THIS SECTION 5.9 TO
MUTUAL ARBITRATION. Service of process in any such action may be effected in
the manner provided in Section 5.6 for delivery of notices.
5.10 Captions. Paragraph captions are inserted for convenience only
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and in no way are to be construed to define, limit or affect the construction or
interpretation hereof.
4.
5.11 Force Majeure. A party shall not be liable for nonperformance
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or delay in performance (other than of obligations regarding payment of money or
confidentiality) caused by any event reasonably beyond the control of such party
including, but not limited to, wars, hostilities, revolutions, riots, civil
commotion, national emergency, strikes, lockouts, unavailability of supplies,
epidemics, fire, flood, earthquake, force of nature, explosion, embargo or any
other Act of God, or any law, proclamation, regulation, ordinance or other act
or order of any court, government or governmental agency.
5.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first written above.
THE MICHAELS CONCEPTS IN WOOD, INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
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Title: PRES
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RESTORATION HARDWARE, INC.
By: /s/ Xxxxxx Xxx
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Title: CFO
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SIGNATURE PAGE TO SUPPLY AGREEMENT
